India's Mercator says will not use ship for Iran oil imports

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Last Updated: Fri, Mar 01, 2013 15:00 hrs

By Nidhi Verma

NEW DELHI, March 1 (Reuters) - India's Mercator Lines has
stopped offering a ship for transporting Iranian oil to India
due to U.S. political pressure, industry and shipping sources
said, adding to obstacles Iran faces in exporting its crude.

The Omvati Prem was the only ship backed by local emergency
insurance and available for charter by Indian refiners when U.S.
and European sanctions hit other cover for ships carrying
Iranian crude.

Iran took advantage of this to engage the ship for the
delivery of two cargoes to its top Indian client, refiner MRPL
, which does not have the facilities to take Tehran's
larger vessels.

National Iranian Oil Corp (NIOC), which does not have
smaller ships like the Omvati Prem, will now have to use its
suezmax ships only partially loaded to be able to deliver to
MRPL's plant.

"At the moment we are not having any plans to lift cargoes
from Iran," Kowshik Kuchroo, president of shipping at Mercator
Lines Ltd., said in an interview.

EU and U.S. trade sanctions on Iran have targeted insurance
on ships carrying its crude, as part of an effort to limit
Tehran's oil revenue to curb its nuclear programme. Iran's crude
exports last year were roughly halved as a result.

The four biggest buyers of Iran's crude - India, China,
Japan and South Korea - cut shipments by so much that they were
given waivers from sanctions, which would have shut them out of
the U.S. financial system. To renew those waivers, however, they
need to make further cuts.

India's imports from Iran fell 22 percent in the first 10
months of its annual contract to around 286,400 barrels per day
(bpd). That meant Iran slipped to fifth among its suppliers from
ranking second a year ago.

Energy-hungry India, the world's fourth-biggest oil
importer, is expanding its refining capacity to meet rising
local demand. It ships in about 80 percent of its crude needs
from overseas.

Indian insurance cover was meant to help local shippers and
refiners continued to obtain oil supplies from Iran.

In January Reuters reported that Iran had chartered Omvati
Prem with cover provided by Indian insurance companies for
supplying oil to MRPL in December.

A shipping source said Mercator had decided against using
the Omvati Prem for Iranian cargoes due to pressure from the
United States.

"To protect its overall business, Mercator had to take this
decision (to halt Iranian voyages). Do you think it's easy to
work against U.S. sanctions?" the source said.

U.S. Ambassador to India Nancy J Powell raised the issue
that Mercator was using a loophole to help Iran supply oil on
Feb. 15 in a meeting with India National Security Advisor Shiv
Shankar Menon, oil industry and diplomatic sources said.

An email seen by Reuters in connection with the meeting said
the United States wanted to discuss Indian companies' deals with
Iran "including the transaction that has received press
recently".

NIOC normally supplies oil in vessels owned by National
Iranian Tanker Company (NITC), a banned entity under U.S.
sanctions.

NITC had hired the Omvati Prem through Dubai-based Sea
Enterprise Ltd, a letter seen by Reuters showed.

NIOC in February informed MRPL that its contract to use the
vessel Omvati Prem had been terminated, an oil industry source
said.